The broadly reactive cysteine protease dipeptidyl peptidase I (DPPI, cathepsin C) is thought to activate all progranzymes (zymogens of lymphocyte serine proteases) to form mature granzymes. We synthesized dipeptide 7-amino-4-methylcoumarin (AMC) substrates containing progranzyme activation sequences and showed that they were efficiently hydrolyzed by DPPI. However, DPPI will not hydrolyze Ile-Ile-AMC, the N-terminal dipeptide sequence found in mature granzymes. Introduction of the nonphysiological homophenylalanine (Hph) residue at P1 resulted in the best substrate Ala-Hph-AMC for DPPI (k(cat)/K(m)=9,000,000M(-1)s(-1)). The charged N-terminal amino group of the substrate was essential and replacement of the NH(2) group with OH or NH(CH(3)) in Gly-Phe-AMC reduced the k(cat)/K(m) value by two to three orders of magnitude. A hydrazide azaglycine analog, NH(2)NHCO-Phe-AMC, was not hydrolyzed at pH 5.5, but underwent slow hydrolysis at lower pHs where the amino group is partially protonated. DPPI also failed to hydrolyze NH(2)COCH(2)-Phe-AMC, where the NH(2) group is unprotonated. The results reported in this paper should be useful in the design of better DPPI inhibitors to block granzyme maturation and granzyme-dependent apoptosis.